Premier Foods abandons plan to sell Ambrosia custard unit

UK – British food manufacturer has dropped plans to offload
its Ambrosia brand which includes rice pudding and custards, which it had
planned to sell for a consideration of about US$129 million.

The company which makes Mr Kipling cakes has blamed
difficult business climate as well as its huge debt which it had planned to service
using the proceeds from the divestment.

The planned sale was in line with strategic
business review to focus on key brands such as Batchelors.

The embattled Chief Executive, Gavin Darby who
stepped down from the company last month had put the Ambrosia brand on sale following
pressure from activist investor Oasis to restructure the business.

He had said that the disposal would help focus
resources ‘on areas of the business which have the best potential for growth
through accelerated investment in consumer marketing and high return capital projects’.

“A number of parties expressed interest and, since
the new year the company has been engaged in detailed discussions with a small
group of potential buyers,” Premier said.

“The board has concluded that in the present
business climate the process will not result in a satisfactory financial
outcome.

As a result, these discussions have now concluded.”

Last month, the company elevated finance chief, Alastair
Murray to acting chief executive officer after former boss Gavin Darby was
ousted by activist investor, Oasis Management.

Hedge fund Oasis had long sought Mr Darby’s
removal, blaming him for poor volumes and sales for the past disappointing
financial years.

In July, he was almost ousted by investors when 41%
of shareholders voted against him, despite having received a 99.5% endorsement
in 2017.

His misfortunes surfaced in 2016 when US spice maker McCormick walked away from a proposed US$693.53
million (£537 million) takeover, which hastened a 27% drop in Premier shares.

The company which also makes Oxo-cubes had said its
third-quarter revenue fell 2.2%, on lower sales at its lower margin non-branded
Sweet Treats unit.